GlobeNewswire Inc | Jul 28, 2021 04:02PM EDT

July 28, 2021

SCOTTSDALE, Ariz., July 28, 2021 (GLOBE NEWSWIRE) -- Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, reported second quarter results for the period ended June30, 2021.

Summary Operating Results (unaudited)(Dollars in thousands, except per share amounts)

Three Months Ended June 30, Six Months Ended June 30, 2021 2020 % Chg 2021 2020 % ChgHomesclosed 3,273 2,770 18 % 6,163 5,086 21 %(units)Homeclosing $ 1,264,643 $ 1,031,591 23 % $ 2,344,625 $ 1,922,008 22 %revenueAveragesales $ 386 $ 372 4 % $ 380 $ 378 1 %price -closingsHomeorders 3,542 3,597 (2 ) % 7,000 6,699 4 %(units)Homeorder $ 1,499,672 $ 1,290,454 16 % $ 2,848,802 $ 2,470,391 15 %valueAveragesales $ 423 $ 359 18 % $ 407 $ 369 10 %price -ordersEndingbacklog 5,509 4,395 25 %(units)Endingbacklog $ 2,317,534 $ 1,648,451 41 %valueAveragesales $ 421 $ 375 12 %price -backlogEarningsbefore $ 215,651 $ 115,862 86 % $ 381,628 $ 202,695 88 %incometaxesNet $ 167,389 $ 90,678 85 % $ 299,232 $ 161,830 85 %earningsDiluted $ 4.36 $ 2.38 83 % $ 7.80 $ 4.20 86 %EPS

MANAGEMENT COMMENTS

Homebuying demand in the second quarter of 2021 remained strong and steady as macroeconomic conditions improved, said Steven J. Hilton, executive chairman of Meritage Homes. "Our second quarter 2021 average absorption pace was 5.5 per month,up from 5.0 in the second quarter of 2020 even as we metered our orders pace. Although our orders pace was strong, a 10% decline in average community count resulted in a modest 2% decline in quarterly sales orders to 3,542 homes this quarter, compared to the exceptionally strong sales orders in the second quarter of 2020. Demonstrating our high level of execution and ability to navigate ongoing supply chain challenges, we closed 3,273 homes, the best second quarter of closings in company history which was also 18% greater than prior year, as well as generated the Company's all-time high quarterly gross margin of 27.3%."

Mr. Hilton continued, As we get closer to attaining our mid-2022 goal of 300 communities, we exceeded our own expectations and had 226 active communities at June 30, 2021, reflecting an 11% sequential quarterly increase from 203 and, we believe, the start of meaningful growth. We opened 45 new communities this quarter and our strong pipeline of community openings over the next four quarters should position us well both to address market demand with a greater volume of affordable entry-level and first move-up homes and to drive continued profitability.

Our strategy continues to successfully leverage demographic trends in homebuying for millennials and baby boomers, as well as market conditions of constrained housing supply and sustained lower interest rates, said Phillippe Lord, chief executive officer of Meritage Homes. During the quarter, we invested significantly in growth by spending a record $551 million on land acquisition and development. Approximately 9,000 net new lots were secured, a 114% increase over prior year, bringing our total lot supply to over 63,000. Inclusive of this additional spend, our net debt to capital ratio was 15.4% this quarter, as we remain committed to sustained growth, a strong balance sheet, and maintaining liquidity.

"For the second quarter of 2021, home closing revenue of $1.3 billion was 23% greater than last year," Mr. Lord remarked. "Leveraging strong operational efficiencies and favorable pricing power, our home closing gross margin expanded 590 bps year-over-year from 21.4% to 27.3% this quarter and our diluted EPS increased 83% year-over-year from $2.38 to $4.36 after the impact of $18.2 million of early debt extinguishment."

Mr. Lord added, Based on our current forecast and confidence in delivering our backlog, we are projecting 2021 home closings of approximately 12,500-13,000 and 2021 home closing revenue in the range of $5.00-5.25 billion. In addition, we anticipate full year home closing gross margin of around 27.5% and an effective tax rate of 22.5-23.0%, which we expect will translate into approximately $18.55-19.45 of diluted EPS for 2021.

"Housing demand remains strong and we are still able to sell our homes soon after they are released. Looking ahead, we will continue to adjust and maximize prices based on market conditions and to align our orders pace with our production schedule, which is affected by supply chain constraints. With notable lumber price declines over the last couple months, we expect our net construction costs will stay flat or decline over the next couple of quarters. We believe that this improvement coupled with our ongoing community count growth will contribute to strong financial results in the short- and medium-term," concluded Mr. Lord.

SECOND QUARTER RESULTS

-- The total orders of 3,542 for the second quarter of 2021 reflected a decrease of 2% year-over-year, driven by a 9% increase in average absorption pace from 5.0 to 5.5 per month, which was offset by a 10% decrease in average communities. Entry-level represented 81% of second quarter 2021 orders, compared to 70% in the same quarter in 2020. Strong housing demand enabled Meritage to achieve higher average absorptions in the East and Central regions, which were up 25% and 8%, respectively. Average absorption pace in the West region was relatively flat year-over-year. The tight housing supply conditions combined with strong homebuying demand created considerable pricing power in the market, which generated year-over-year increases in average sales price ("ASP") for both orders and backlog. Even as our product mix continued to shift toward entry-level homes, ASP on orders in the second quarter of 2021 exceeded $420,000. -- The 23% year-over-year increase in home closing revenue to $1.3 billion for the second quarter of 2021 was due to 18% higher home closing volume and a 4% increase in closing ASP, which is primarily attributable to the sustained strength in housing demand and the significant price increases the market has allowed us to push through in recent quarters, despite the product mix shift toward entry-level homes. -- The 590 bps improvement in second quarter 2021 home closing gross margin to 27.3% from 21.4% a year ago mainly resulted from efficiencies gained from higher ASP and leveraging of our fixed costs on greater home closing volume, which more than offset higher lumber prices and increases in other commodity costs. -- Selling, general and administrative expenses ("SG&A") were 9.2% of second quarter 2021 home closing revenue, a 110 bps improvement over 10.3% in the prior year. This improvement was due to greater leverage of fixed expenses on higher home closing revenue, in addition to cost savings from technology enhancements, particularly related to our sales and marketing efforts. -- Loss on early extinguishment of debt of $18.2 million was recognized in the second quarter of 2021 in connection with the early redemption in April 2021 of the 7.00% senior notes due 2022 ("2022 Notes"). -- The second quarter effective income tax rate was 22.4% in 2021 compared to 21.7% in 2020. The reduced rate in both years primarily stems from eligible energy tax credits on qualifying energy-efficient homes closed under the Taxpayer Certainty and Disaster Tax Relief Act enacted in December 2019. -- Second quarter 2021 pre-tax margin increased 560 bps to 16.8%, compared to 11.2% in the second quarter of 2020. Net earnings were $167.4 million ($4.36 per diluted share) for the second quarter of 2021, an 85% increase over $90.7 million ($2.38 per diluted share) for the second quarter of 2020. Strong earnings growth reflected higher closing volume, pricing power, expanded gross margin and improved overhead leverage, which led to an 83% year-over-year improvement in earnings per diluted share.

YEAR TO DATE RESULTS

-- Total orders for the first half of 2021 increased 4% year-over-year, driven by a 21% increase in absorption pace, partially offset by a 14% decrease in average community count compared to the first half of 2020. -- Home closing revenue increased 22% in the first half of 2021 to $2.3 billion due to 21% higher home closing volume and a 1% increase in closing ASP given the favorable pricing environment. -- The 530 bps improvement for home closing gross margin in the first half of 2021 to 26.1% from 20.8% primarily resulted from higher ASP and better leveraging of fixed costs on greater home closing volume. -- SG&A expenses improved 100 bps year-over-year to 9.5% of home closing revenue, compared to 10.5% in the first half of 2020, due to operating efficiencies and improved leverage of fixed expenses on higher home closing volume and revenue. -- Loss on early extinguishment of debt of $18.2 million was recognized in the first half of 2021 in connection with the early redemption of the 2022 Notes. -- The effective tax rate for the first half of 2021 was 21.6%, compared to 20.2% for the first half of 2020. The effective tax rate in both periods benefited from tax credits earned for qualifying energy-efficient homes under the Taxpayer Certainty and Disaster Tax Relief Act enacted in December 2019. -- Net earnings were $299.2 million ($7.80 per diluted share) for the first half of 2021, an 85% increase over $161.8 million ($4.20 per diluted share) for the first half of 2020, primarily reflecting higher closing volume, pricing power, expanded gross margin and greater overhead leverage in 2021.

BALANCE SHEET

-- Cash and cash equivalents at June 30, 2021 totaled $684.4 million, compared to $745.6 million at December 31, 2020, reflecting investments in real estate and development and share repurchases. Real estate assets increased from $2.8 billion at December 31, 2020 to $3.3 billion at June 30, 2021, reflecting an increase in homes under contract under construction and finished homesites and homesites under development. -- A total of over 63,000 lots were owned or controlled as of June 30, 2021, compared to approximately 43,000 total lots at June 30, 2020. In the second quarter of 2021, about 9,000 net new lots were added, representing 54 future communities, of which 80% are for entry-level communities. -- Debt-to-capital and net debt-to-capital ratios were 30.6% and 15.4%, respectively, at June 30, 2021, compared to 30.3% and 10.5%, respectively, at December 31, 2020. -- In the first half of 2021, we repurchased 300,000 shares of stock for a total of $27.5 million, of which 200,000 shares totaling $19.1 million were repurchased during the second quarter of 2021. -- On April 15, 2021, the Company closed on its offering of $450 million 3.875% senior notes due 2029 and received approximately $444 million in net proceeds. On March 31, 2021, the company issued a notice of redemption for April 30, 2021 for all of its $300 million aggregate principal amount of the 2022 Notes. The redemption of the 2022 Notes resulted in $18.2 million of early extinguishment of debt charges in the second quarter of 2021.

CONFERENCE CALLManagement will host a conference call to discuss its second quarter results at 7:00 a.m. Pacific Time (10:00 a.m. Eastern Time) on Thursday, July 29, 2021. The call will be webcast live with an accompanying slideshow available on the "Investor Relations" page of the Company's website at https://investors.meritagehomes.com. Telephone participants will be able to join by dialing in to 1-877-407-6951 US toll free or 1-412-902-0046 on the day of the call.

A replay of the call will be available via webcast beginning at approximately 11:00 a.m. Pacific Time (2:00 p.m. Eastern Time) on July 29, 2021 and extending through August 12, 2021, at https://investors.meritagehomes.com.

Meritage Homes Corporation and SubsidiariesConsolidated Income Statements(In thousands, except per share data)(Unaudited)

Three Months Ended June 30, 2021 2020 Change $ Change %Homebuilding: Home closing $ 1,264,643 $ 1,031,591 $ 233,052 23 % revenue Land closing 12,956 1,488 11,468 771 % revenue Total closing 1,277,599 1,033,079 244,520 24 % revenue Cost of home (919,342 ) (810,895 ) 108,447 13 % closings Cost of land (13,288 ) (2,936 ) 10,352 353 % closings Total cost of (932,630 ) (813,831 ) 118,799 15 % closings Home closing 345,301 220,696 124,605 56 % gross profit Land closing (332 ) (1,448 ) 1,116 (77 ) % gross loss Total closing 344,969 219,248 125,721 57 % gross profitFinancial Services: Revenue 5,665 4,478 1,187 27 % Expense (2,367 ) (1,758 ) 609 35 % Earnings from financial services 1,317 1,069 248 23 % unconsolidated entities and other, net Financial 4,615 3,789 826 22 % services profitCommissions and (73,889 ) (70,408 ) 3,481 5 %other sales costsGeneral andadministrative (43,156 ) (36,176 ) 6,980 19 %expensesInterest expense (77 ) (2,105 ) (2,028 ) (96 ) %Other income, net 1,377 1,514 (137 ) (9 ) %Loss on earlyextinguishment of (18,188 ) ? 18,188 n/adebtEarnings before 215,651 115,862 99,789 86 %income taxesProvision for (48,262 ) (25,184 ) 23,078 92 %income taxesNet earnings $ 167,389 $ 90,678 $ 76,711 85 % Earnings per common share: Basic Change $ or Change shares % Earnings per $ 4.43 $ 2.41 $ 2.02 84 % common share Weighted average shares 37,818 37,599 219 1 % outstanding Diluted Earnings per $ 4.36 $ 2.38 $ 1.98 83 % common share Weighted average shares 38,377 38,169 208 1 % outstanding

Six Months Ended June 30, 2021 2020 Change $ Change %Homebuilding: Home closing $ 2,344,625 $ 1,922,008 $ 422,617 22 % revenue Land closing 16,755 12,084 4,671 39 % revenue Total closing 2,361,380 1,934,092 427,288 22 % revenue Cost of home (1,732,669 ) (1,522,952 ) 209,717 14 % closings Cost of land (16,540 ) (13,149 ) 3,391 26 % closings Total cost of (1,749,209 ) (1,536,101 ) 213,108 14 % closings Home closing 611,956 399,056 212,900 53 % gross profit Land closing gross profit/ 215 (1,065 ) 1,280 120 % (loss) Total closing 612,171 397,991 214,180 54 % gross profitFinancial Services: Revenue 10,416 8,390 2,026 24 % Expense (4,538 ) (3,493 ) 1,045 30 % Earnings from financial services 2,497 1,730 767 44 % unconsolidated entities and other, net Financial 8,375 6,627 1,748 26 % services profitCommissions and (141,633 ) (131,581 ) 10,052 8 %other sales costsGeneral andadministrative (81,105 ) (70,346 ) 10,759 15 %expensesInterest expense (167 ) (2,121 ) (1,954 ) (92 ) %Other income, net 2,175 2,125 50 2 %Loss on earlyextinguishment of (18,188 ) ? 18,188 n/adebtEarnings before 381,628 202,695 178,933 88 %income taxesProvision for (82,396 ) (40,865 ) 41,531 102 %income taxesNet earnings $ 299,232 $ 161,830 $ 137,402 85 % Earnings per common share: Basic Change $ or Change shares % Earnings per $ 7.93 $ 4.28 $ 3.65 85 % common share Weighted average shares 37,731 37,842 (111 ) ? % outstanding Diluted Earnings per $ 7.80 $ 4.20 $ 3.60 86 % common share Weighted average shares 38,357 38,512 (155 ) ? % outstanding

Meritage Homes Corporation and Subsidiaries Consolidated Balance Sheets(In thousands)(Unaudited)

June 30, 2021 December 31, 2020Assets: Cash and cash equivalents $ 684,374 $ 745,621 Other receivables 131,104 98,573 Real estate ^(1) 3,251,787 2,778,039 Deposits on real estate under option or 74,397 59,534 contractInvestments in unconsolidated entities 3,943 4,350 Property and equipment, net 36,224 38,933 Deferred tax asset 33,502 36,040 Prepaids, other assets and goodwill 106,222 103,308 Total assets $ 4,321,553 $ 3,864,398 Liabilities: Accounts payable $ 215,221 $ 175,250 Accrued liabilities 282,762 296,121 Home sale deposits 33,958 25,074 Loans payable and other borrowings 19,534 23,094 Senior notes, net 1,141,934 996,991 Total liabilities 1,693,409 1,516,530 Stockholders' Equity: Preferred stock ? ? Common stock 376 375 Additional paid-in capital 436,805 455,762 Retained earnings 2,190,963 1,891,731 Total stockholders? equity 2,628,144 2,347,868 Total liabilities and stockholders? equity $ 4,321,553 $ 3,864,398

^(1) Real estate ? Allocated costs:Homes under contract under construction $ 1,069,511 $ 873,365 Unsold homes, completed and under 353,047 357,861 constructionModel homes 73,846 82,502 Finished home sites and home sites under 1,755,383 1,464,311 developmentTotal real estate $ 3,251,787 $ 2,778,039

Supplemental Information and Non-GAAP Financial Disclosures (Dollars in thousands unaudited):

Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020Depreciationand $ 6,879 $ 7,540 $ 13,414 $ 14,551 amortization Summary ofCapitalized Interest:Capitalizedinterest, $ 57,540 $ 78,162 $ 58,940 $ 82,014 beginning ofperiodInterest 16,321 17,550 32,413 34,085 incurredInterest (77 ) (2,105 ) (167 ) (2,121 ) expensedInterestamortized tocost of home (17,074 ) (20,725 ) (34,476 ) (41,096 ) and landclosingsCapitalizedinterest, end $ 56,710 $ 72,882 $ 56,710 $ 72,882 of period June 30, 2021 December 31, 2020Senior notes,net, loanspayable and $ 1,161,468 $ 1,020,085 otherborrowingsStockholders' 2,628,144 2,347,868 equityTotal capital $ 3,789,612 $ 3,367,953 Debt-to-capital 30.6 % 30.3 % Senior notes,net, loanspayable and $ 1,161,468 $ 1,020,085 otherborrowingsLess: cash andcash (684,374 ) (745,621 ) equivalentsNet debt $ 477,094 $ 274,464 Stockholders? 2,628,144 2,347,868 equityTotal net $ 3,105,238 $ 2,622,332 capitalNet 15.4 % 10.5 % debt-to-capital

Meritage Homes Corporation and SubsidiariesConsolidated Statements of Cash Flows(In thousands) (Unaudited)

Six Months Ended June 30, 2021 2020Cash flows from operating activities: Net earnings $ 299,232 $ 161,830 Adjustments to reconcile net earnings to netcash (used in)/provided by operating activities:Depreciation and amortization 13,414 14,551 Stock-based compensation 8,590 9,594 Loss on early extinguishment of debt 18,188 ? Equity in earnings from unconsolidated entities (1,807 ) (1,691 ) Distribution of earnings from unconsolidated 2,215 1,491 entitiesOther 2,266 2,548 Changes in assets and liabilities: (Increase)/decrease in real estate (469,733 ) 9,655 (Increase)/decrease in deposits on real estate (14,863 ) 2,225 under option or contract(Increase)/decrease in other receivables, (36,390 ) 3,469 prepaids and other assetsIncrease in accounts payable and accrued 26,532 34,772 liabilitiesIncrease/(decrease) in home sale deposits 8,884 (999 ) Net cash (used in)/provided by operating (143,472 ) 237,445 activitiesCash flows from investing activities: Investments in unconsolidated entities (1 ) (3 ) Distributions of capital from unconsolidated ? 1,000 entitiesPurchases of property and equipment (10,970 ) (10,343 ) Proceeds from sales of property and equipment 292 259 Maturities/sales of investments and securities 2,697 632 Payments to purchase investments and securities (2,697 ) (632 ) Net cash used in investing activities (10,679 ) (9,087 ) Cash flows from financing activities: Repayment of loans payable and other borrowings (5,758 ) (2,389 ) Repayment of senior notes (317,690 ) ? Proceeds from issuance of senior notes 450,000 ? Payment of debt issuance costs (6,102 ) ? Repurchase of shares (27,546 ) (60,813 ) Net cash provided by/(used in) financing 92,904 (63,202 ) activitiesNet (decrease)/increase in cash and cash (61,247 ) 165,156 equivalentsBeginning cash and cash equivalents 745,621 319,466 Ending cash and cash equivalents $ 684,374 $ 484,622

Meritage Homes Corporation and SubsidiariesOperating Data(Dollars in thousands) (Unaudited)

Three Months Ended June 30, 2021 2020 Homes Value Homes ValueHomes Closed: Arizona 481 $ 165,990 427 $ 142,359 California 318 198,232 247 150,343 Colorado 145 74,987 184 89,087 West Region 944 439,209 858 381,789 Texas 1,154 403,838 914 295,975 Central Region 1,154 403,838 914 295,975 Florida 443 160,377 367 138,608 Georgia 171 62,477 166 58,698 North Carolina 330 119,838 288 98,738 South Carolina 81 28,209 98 30,206 Tennessee 150 50,695 79 27,577 East Region 1,175 421,596 998 353,827 Total 3,273 $ 1,264,643 2,770 $ 1,031,591 Homes Ordered: Arizona 624 $ 256,804 737 $ 231,057 California 344 217,228 388 224,639 Colorado 181 104,134 153 70,831 West Region 1,149 578,166 1,278 526,527 Texas 1,101 428,375 1,215 392,502 Central Region 1,101 428,375 1,215 392,502 Florida 468 176,118 390 136,362 Georgia 193 77,309 190 65,434 North Carolina 390 153,032 326 106,383 South Carolina 88 32,595 95 29,262 Tennessee 153 54,077 103 33,984 East Region 1,292 493,131 1,104 371,425 Total 3,542 $ 1,499,672 3,597 $ 1,290,454

Six Months Ended June 30, 2021 2020 Homes Value Homes ValueHomes Closed: Arizona 891 $ 303,258 886 $ 293,603 California 595 370,131 455 285,145 Colorado 320 159,250 370 180,771 West Region 1,806 832,639 1,711 759,519 Texas 2,117 722,223 1,688 551,884 Central Region 2,117 722,223 1,688 551,884 Florida 860 301,205 603 232,397 Georgia 317 117,616 281 100,696 North Carolina 629 226,851 510 178,155 South Carolina 166 56,055 151 47,611 Tennessee 268 88,036 142 51,746 East Region 2,240 789,763 1,687 610,605 Total 6,163 $ 2,344,625 5,086 $ 1,922,008 Homes Ordered: Arizona 1,226 $ 479,239 1,307 $ 414,428 California 630 390,619 740 449,571 Colorado 350 193,913 352 169,296 West Region 2,206 1,063,771 2,399 1,033,295 Texas 2,216 820,343 2,274 735,492 Central Region 2,216 820,343 2,274 735,492 Florida 947 355,227 707 255,804 Georgia 357 138,866 346 120,417 North Carolina 809 310,719 613 207,638 South Carolina 164 58,997 182 57,176 Tennessee 301 100,879 178 60,569 East Region 2,578 964,688 2,026 701,604 Total 7,000 $ 2,848,802 6,699 $ 2,470,391 Order Backlog: Arizona 1,328 $ 520,034 932 $ 307,302 California 479 295,198 430 256,694 Colorado 238 139,437 178 86,158 West Region 2,045 954,669 1,540 650,154 Texas 1,729 670,583 1,634 556,787 Central Region 1,729 670,583 1,634 556,787 Florida 637 268,971 475 187,241 Georgia 196 79,207 198 69,559 North Carolina 634 247,292 322 109,026 South Carolina 118 44,175 102 34,054 Tennessee 150 52,637 124 41,630 East Region 1,735 692,282 1,221 441,510 Total 5,509 $ 2,317,534 4,395 $ 1,648,451

Meritage Homes Corporation and SubsidiariesOperating Data(Unaudited)

Three Months Ended June 30, 2021 2020 Ending Average Ending AverageActive Communities: Arizona 38 35.5 38 35.5 California 20 19.5 28 28.5 Colorado 17 14.5 13 13.0 West Region 75 69.5 79 77.0 Texas 64 61.5 68 73.0 Central Region 64 61.5 68 73.0 Florida 34 32.0 36 35.0 Georgia 10 11.0 17 16.0 North Carolina 26 25.0 21 20.5 South Carolina 7 6.5 5 6.0 Tennessee 10 9.0 11 11.5 East Region 87 83.5 90 89.0 Total 226 214.5 237 239.0

Six Months Ended June 30, 2021 2020 Ending Average Ending AverageActive Communities: Arizona 38 34.6 38 34.5 California 20 18.3 28 26.0 Colorado 17 13.3 13 15.5 West Region 75 66.2 79 76.0 Texas 64 62.0 68 72.5 Central Region 64 62.0 68 72.5 Florida 34 31.6 36 34.5 Georgia 10 9.7 17 17.5 North Carolina 26 23.7 21 23.0 South Carolina 7 6.3 5 7.0 Tennessee 10 8.3 11 10.0 East Region 87 79.6 90 92.0 Total 226 207.8 237 240.5

About Meritage Homes CorporationMeritage Homes is the sixth-largest public homebuilder in the United States, based on homes closed in 2020. The Company offers a variety of homes that are designed with a focus on entry-level and first move-up buyers in Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina and Tennessee.

Meritage Homes has delivered over 145,000 homes in its 36-year history, and has a reputation for its distinctive style, quality construction, and award-winning customer experience. The Company is the industry leader in energy-efficient homebuilding and an eight-time recipient of the U.S. Environmental Protection Agencys ENERGY STAR Partner of the Year for Sustained Excellence Award since 2013 for innovation and industry leadership in energy efficient homebuilding.

For more information, visit www.meritagehomes.com.

The information included in this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include expectations about the housing market in general; projected 2021 home closings, home closing revenue, gross margins, effective tax rate, diluted earnings per share and future community counts; trends in construction costs; and expectations about our future results.

Such statements are based on the current beliefs and expectations of Company management and current market conditions, which are subject to significant uncertainties and fluctuations. Actual results may differ from those set forth in the forward-looking statements. The Company makes no commitment, and disclaims any duty, except as required by law, to update or revise any forward-looking statements to reflect future events or changes in these expectations. Meritage's business is subject to a number of risks and uncertainties. As a result of those risks and uncertainties, the Company's stock and note prices may fluctuate dramatically. These risks and uncertainties include, but are not limited to, the following: changes in interest rates and the availability and pricing of residential mortgages; inflation in the cost of materials used to develop communities and construct homes; supply chain constraints; our ability to obtain performance and surety bonds in connection with our development work; the ability of our potential buyers to sell their existing homes; legislation related to tariffs; the adverse effect of slow absorption rates; impairments of our real estate inventory; cancellation rates; competition; home warranty and construction defect claims; failures in health and safety performance; fluctuations in quarterly operating results; our level of indebtedness; our ability to obtain financing if our credit ratings are downgraded; our potential exposure to and impacts from natural disasters or severe weather conditions; the availability and cost of finished lots and undeveloped land; the success of our strategy to offer and market entry-level and first move-up homes; a change to the feasibility of projects under option or contract that could result in the write-down or write-off of earnest or option deposits; our limited geographic diversification; the replication of our energy-efficient technologies by our competitors; shortages in the availability and cost of subcontract labor; our exposure to information technology failures and security breaches and the impact thereof; the loss of key personnel; changes in tax laws that adversely impact us or our homebuyers; our inability to prevail on contested tax positions; failure to comply with laws and regulations; our compliance with government regulations; negative publicity that affects our reputation; disruptions to our business by COVID-19, fear of a similar event, and measures that federal, state and local governments and/or health authorities implement to address it; and other factors identified in documents filed by the Company with the Securities and Exchange Commission, including those set forth in our Form 10-K for the year ended December 31, 2020 and our Form 10-Q for the quarter ended March 31, 2021 under the caption "Risk Factors," which can be found on our website at www.investors.meritagehomes.com.

Contact: Emily Tadano, VP Investor Relations (480) 515-8979 (office) investors@meritagehomes.com